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Incorporada" (Exhibit A) shows that it is to

G.R. No. L-15429 December 1, 1919 be organized for the purchase and sale,
UY SIULIONG, MARIANO LIMJAP, GACU importation and exportation, of the products
UNG JIENG, EDILBERTO CALIXTO and UY of the country as well as of foreign countries;
CHO YEE, petitioners, To discount promissory notes, bills of
vs. exchange, and other negotiable instruments;
THE DIRECTOR OF COMMERCE AND The purchase and sale of bills of exchange,
INDUSTRY, respondent. bonds, stocks, or joint account of mercantile
FACTS: and industrial associations and of all classes
The purpose of this action is to obtain the of mercantile documents; commissions,
writ of mandamus to require the respondent consignments;"xxx.. The respondent
to file and register, upon the payment of the contends (a) that the proposed articles of
lawful fee, articles of incorporation, and to incorporation presented for file and registry
issue to the petitioners as the incorporators permitted the petitioners to engage in a
of a certain corporation to be known as business which had for its end more than
"Siuliong y Compañia, Inc.," one purpose; (b) that it permitted the
a certificate under the seal of the office of petitioners to engage in the banking
said respondent, certifying that the articles business, and (c) to deal in real estate, in
of incorporation have been duly filed and violation of the Act of Congress of July 1,
registered in his office in accordance with the 1902. The petitioners, insisted that said
law. That prior to the presentation of the proposed articles of incorporation do not
petition, petitioners associated together as permit it to enter into the banking business
partners, which partnership was known as nor to engage in the purchase and sale of
"mercantil regular colectiva, under the name real estate in violation of said Act of
of "Siuliong y Cia.;" Petitioners have been Congress, expressly renounced in open
members of said partnership of "Siuliong y court their right to engage in such business
Cia.," desired to dissolve the partnership and under their articles of incorporation, even
to form a corporation composed of the same though said articles might be interpreted in
persons as incorporators, to be known as a way to authorize them to so to do.
"Siulong y Compañia, Incorporada;" That the ISSUE : Whether or not a corporation
purpose of said corporation, "Siuliong y Cia., organized for commercial purposes in the
Inc.," is to acquire the business of the Philippine Islands can be organized for more
partnership theretofore known as Siuliong & than one purpose?
Co., and to continue said business with HELD: YES. Considering the purposes and
some of its objects or purposes; An objects of the proposed articles of
examination of the articles of incorporation incorporation which are enumerated, we are
of the said "Siuliong y Compañia, of the opinion that it contains nothing which
violates in the slightest degree any of the the City Judge be enjoined from
provisions of the laws of the Philippine further proceeding with the case
Islands, and the petitioners are, therefore, because of improper venue.
entitled to have such articles of 5. CFI – dismissed the case and held
incorporation filed and registered as prayed that Clavecilla may be sued either in
for by them and to have issued to them Manila (principal office) or in CDO
a certificate under the seal of the office of the (branch office).
respondent, setting forth that such articles 6. Clavecilla appealed to the SC
of incorporation have been duly filed in his contending that the suit against it
office. (Sec. 11, Act No. 1459.) should be filed in Manila where it
Therefore, the petition prayed for is hereby holds its principal office.
granted, and without any finding as to costs, Issue:
it is so ordered. WON the present case against Clavecilla
should be filed in Manila where it holds
CLAVECILLA Radio System v. Hon. its principal office.
Agustin Antillon Held:
Facts: YES
1. New Cagayan Grocery (NECAGRO) It is clear that the case from damages is
filed a complaint for damages based upon a written contract.
against Clavecilla Radio system. Under par. (b)(3) Sec. 1 Rule 4 of the New
They alleged that Clavecilla omitted Rules of Court, when an action is not upon
the word “NOT” in the letter a written contract then the case should be
addressed to NECAGRO for filed in the municipality where the
transmittal at Clavecilla Cagayan de defendant or any of the defendant resides
Oro Branch. or maybe served upon with summons.
2. NECAGRO alleged that the omission In corpo. Law, the residence of the
of the word “not” between the word corporation is the place where the principal
WASHED and AVAILABLE altered office is established. Since Clavecilla’s
the contents of the same causing principal office is in Manila, then the suit
them to suffer from damages. against it may properly be file in the City of
3. Clavecilla filed a motion to dismiss Manila.
on the ground of failure to state a As stated in Evangelista v. Santos, the
cause of action and improper venue. laying of the venue of an action is not left to
4. City Judge of CDO denied the MTD. plaintiff’s caprice because the matter is
Clavecilla filed a petition for regulated by the Rules of Court.
prohibition with preliminary ASUNCION V YRIARTE
Injunction with the CFI praying that
FACTS: The proposed incorporators began chief of the division of archives, for and on
an action in the CFI to compel the chief of behalf of the division, has authority under
the division of archives to receive and the Corporation Law (Act No. 1459) to
register said articles of incorporation and to determine the sufficiency of the form of
do any and all acts necessary for the articles of incorporation offered for
complete incorporation of the persons registration with the division.
named in the articles. The court below Section 6 of the Corporation Law reads in
found in favor of the defendant and refused part as follows:
to order the registration of the articles “Five or more persons, not exceeding fifteen,
mentioned, maintaining and holding that a majority of whom are residents of the
the defendant, under the Corporation Law, Philippine Islands, may form a private
had authority to determine both the corporation for any lawful purpose by filing
sufficiency of the form of the articles and with the division of archives, patents,
the legality of the object of the proposed copyrights, and trademarks of the Executive
corporation. This appeal is taken from that Bureau articles of incorporation duly
judgment executed and acknowledged before a notary
The chief of the division of archives, the public, . . .”
respondent, refused to file the articles of Simply because the duties of an official
incorporation, upon the ground that the happen to be ministerial, it does not
object of the corporation, as stated in the necessarily follow that he may not, in
articles, was not lawful and that, in the administration of his office,
pursuance of section 6 of Act No. 1459, determine questions of law. We are of the
they were not registerable. opinion that it is the duty of the division of
Hence, this action to obtain a writ of archives, when articles of incorporation are
mandamus. presented for registration, to determine
ISSUE: Whether or not the chief of the whether the objects of the corporation as
division of archives has authority, under expressed in the articles are lawful. We do
the Corporation Law, on being presented not believe that, simply because articles of
with articles of incorporation for incorporation presented for registration are
registration, to decide not only as to the perfect in form, the division of archives
sufficiency of the form of the articles, but must accept and register them and issue
also as to the lawfulness of the purposes of the corresponding certificate of
the proposed corporation. incorporation no matter what the purpose
HELD: YES. of the corporation may be as expressed in
CORPORATION LAW; POWERS AND the articles. The chief of the division of
DUTIES OF CHIEF OF DIVISION OF archives, on behalf of the division, has also
ARCHIVES, EXECUTIVE BUREAU. — The the power and duty to determine from the
articles of incorporation presented for The power conferred upon the division of
registration the lawfulness of the purposes archives with respect to the registration
of the proposed corporation and whether or of articles of incorporation is not of that
not those purposes bring the proposed character. It is of the same character as
corporation within the purview of the law the determination of a lawsuit by a court
authorizing corporations for given upon the merits. It can be decided only
purposes. one way correctly.
PERFORM DUTIES. — The duties of the
chief of the division of archives, so far as Case Digest: Loyola Grand Villas
relates to the registration of articles of Homeowners (South) Association v. CA
incorporation, are purely ministerial and LOYOLA GRAND VILLAS HOMEOWNERS
not discretional; and mandamus will lie to (SOUTH) ASSOCIATION, INC., petitioner,
compel him to perform his duties under the vs. HON. COURT OF APPEALS, HOME
Corporation Law if, in violation of law, he INSURANCE AND GUARANTY
On the contrary, there is no incompatibility and HORATIO AYCARDO, respondents.
in holding, as we do hold, that his duties
are ministerial and that he has no authority G.R. No. 117188 August 7, 1997
to exercise discretion in receiving and
registering articles of incorporation. He may ROMERO, J.:
exercise judgment — that is, the judicial
function — in the determination of the Loyola Grand Villas Homeowners
question of law referred to, but he may not Association, Inc. (LGVHAI) was organized
use discretion. The question whether or not on 8 February 1983 as the homeoenwers'
the objects of a proposed corporation are association for Loyola Grand Villas. It was
lawful is one that can be decided one way also registered as the sole homeowners'
only. If he err in the determination of that association in the said village with the
question and refuse to file articles which Home Financing Corporation (which
should be filed under the law, that decision eventually became Home Insurance
is subject to review and correction and, Guarantee Corporation ["HIGC"]). However,
upon proper showing, he will be ordered to the association was not able file its
file the articles. corporate by-laws.
Discretion, it may be said generally, is a
faculty conferred upon a court or other The LGVHAI officers then tried to registered
official by which he may decide a its By-Laws in 1988, but they failed to do
question either way and still be right. so. They then discovered that there were
two other homeowners' organizations within effect of automatically dissolving the said
the subdivision - the Loyola Grand Villas corporation.
Homeowners (North) Association, Inc.
[North Association] and herein Petitioner Ruling: No.
Loyola Grand Villas Homeowners (South)
Association, Inc.["South Association]. The pertinent provision of the Corporation
Code that is the focal point of controversy
Upon inquiry by the LGVHAI to HIGC, it in this case states:
was discovered that LGVHAI was dissolved Sec. 46. Adoption of by-laws. - Every
for its failure to submit its by-laws within corporation formed under this Code, must
the period required by the Corporation within one (1) month after receipt of official
Code and for its non-user of corporate notice of the issuance of its certificate of
charter because HIGC had not received any incorporation by the Securities and
report on the association's activities. These Exchange Commission, adopt a code of by-
paved the way for the formation of the laws for its government not inconsistent
North and South Associations. with this Code.
Ordinarily, the word "must" connotes an
LGVHAI then lodged a complaint with HIGC imposition of duty which must be enforced.
Hearing Officer Danilo Javier, and However, the word "must" in a statute, like
questioned the revocation of its "shall," is not always imperative. It may be
registration. Hearing Officer Javier ruled in consistent with an ecercise of discretion. If
favor of LGVHAI, revoking the registration the language of a statute, considered as a
of the North and South Associations. whole with due regard to its nature and
object, reveals that the legislature intended
Petitioner South Association appealed the to use the words "shall" and "must" to be
ruling, contending that LGVHAI's failure to directory, they should be given that
file its by-laws within the period prescribed meaning.
by Section 46 of the Corporation Code
effectively automatically dissolved the The legislative deliberations of the
corporation. The Appeals Board of the HIGC Corporation Code reveals that it was not
and the Court of Appeals both rejected the the intention of Congress to automatically
contention of the Petitioner affirmed the dissolve a corporation for failure to file the
decision of Hearing Officer Javier. By-Laws on time.

Issue: W/N LGVHAI's failure to file its by- Moreover, By-Laws may be necessary to
laws within the period prescribed by govern the corporation, but By-Laws are
Section 46 of the Corporation Code had the still subordinate to the Articles of
Incorporation and the Corporation Code. In ZABAT, respondents.
fact, there are cases where By-Laws are
unnecessary to the corporate existence and G.R. No. 91478 February 7, 1991
to the valid exercise of corporate powers. GANCAYCO, J.:

The Corporation Code does not expressly Antecedents facts:

provide for the effects of non-filing of By-
Laws. However, these have been rectified by PAMPANGA BUS CO., INC. (PAMBUSCO) is
Section 6 of PD 902-A which provides that the owner of the three lots in dispute.
SEC shall possess the power to suspend or PAMBUSCO mortgaged the lots to the
revoke, after proper notice and hearing, the Development Bank of the Philippines (DBP),
franchise or certificate of registration of which were later on foreclosed.
corporations upon failure to file By-Laws
within the required period. Rosita Peña was awarded the lots in a
foreclosure sale for being the highest
This shows that there must be notice and bidder. The certificate of sale was later
hearing before a corporation is dissolved for issued to her and registered in her name.
failure to file its By-Laws. Even assuming
that the existence of a ground, the penalty Subsequently, the Board of Directors of
is not necessarily revocation, but may only PAMBUSCO, through three out of its five
be suspension. directors, issued a resolution to assign its
right of redemption over the lots in favor of
By-Laws are indispensable to corporations, any interested party. The right of
since they are required by law for an orderly redemption was later on assigned to
management of corporations. However, Marcelino Enriquez, who redeemed the
failure to file them within the period property.
prescribed does not equate to the automatic
dissolution of a corporation. Enriquez then sold the lots to spouses
Rising T. Yap and Catalina Lugue-Yap.

Case Digest: Peña v. CA Meanwhile, a case involving the validity of

ROSITA PEÑA petitioner, vs. THE COURT the sale to the spouses Yap was pending,
OF APPEALS, SPOUSES RISING T. YAP and despite the protestations of Peña as to
and CATALINA YAP, PAMPANGA BUS CO., validity of the PAMBUSCO's assignment of
INC., JESUS DOMINGO, JOAQUIN the right of redemption, the lots were
BRIONES, SALVADOR BERNARDEZ, somehow registered in the name of spouses
MARCELINO ENRIQUEZ and EDGARDO A. Yap. Despite the registration of the lots to
spouses Yap, Peña retained possession of
the property. The by-laws of a corporation are its own
private laws which substantially have the
Main Case: same effect as the laws of the corporation.
They are in effect, written, into the charter.
Spouses Yap sought to recover the In this sense they become part of the
possession of the lots from Peña. The latter fundamental law of the corporation with
countered that she is now the legitimate which the corporation and its directors and
owner of the subject lands for having officers must comply.
purchased the same in a foreclosure
proceeding instituted by the DBP against Apparently, only three (3) out of five (5)
PAMBUSCO and no valid redemption members of the board of directors of
having been effected within the period respondent PAMBUSCO convened by virtue
provided by law. of a prior notice of a special meeting. There
was no quorum to validly transact business
The defense was that since the deed of since it is required under its by-laws that at
assignment executed by PAMBUSCO in least four (4) members must be present to
favor of Enriquez was void ab initio for constitute a quorum in a special meeting of
being an ultra vires act of its board of the board of directors.
directors and for being without any
valuable consideration, it could not have Under Section 25 of the Corporation Code
had any legal effect. of the Philippines, the articles of
incorporation or by-laws of the corporation
(It should be noted that the by-laws of may fix a greater number than the majority
PAMBUSCO provide that four out of five of the number of board members to
directors must be present in a special constitute the quorum necessary for the
meeting of the board to constitute a valid transaction of business. Any number
quorum, and that the corporation has less than the number provided in the
already ceased to operate.) articles or by-laws therein cannot
constitute a quorum and any act therein
CFI ruled in favor of Petitioner Peña, but would not bind the corporation; all that the
the same was overturned by the CA. attending directors could do is to adjourn.

Issue: W/N there Peña is entitled to the Moreover, the records show that respondent
lots. PAMBUSCO ceased to operate for about 25
years prior to the board meeting. Being a
Ruling: Yes. dormant corporation for several years, it
was highly irregular, for a group of three (3) by virtue of the questioned resolution was
individuals representing themselves to be not approved by the required number of
the directors of respondent PAMBUSCO to stockholders, the said resolution, as well as
pass a resolution disposing of the only the subsequent assignment and sale, were
remaining asset of the corporation in favor null and void.
of a former corporate officer.
Lastly, for lack of consideration, the
As a matter of fact, the three (3) alleged assignment should be construed as a
directors who attended the special meeting donation. Under Article 725 of the Civil
on November 19, 1974 were not listed as Code, in order to be valid, such a donation
directors of respondent PAMBUSCO in the must be made in a public document and
latest general information sheet. Similarly, the acceptance must be made in the same
the latest list of stockholders of respondent or in a separate instrument. In the latter
PAMBUSCO on file with the SEC does not case, the donor shall be notified of the
show that the said alleged directors were acceptance in an authentic form and such
among the stockholders of respondent step must be noted in both instruments.
PAMBUSCO, in contravention of the rule Since assignment to Enriquez shows that
requiring a director to own one (1) share in there was no acceptance of the donation in
their to qualify as director of a corporation. the same and in a separate document, the
said deed of assignment is thus void ab
Further, under the Corporation Law, the initio.
sale or disposition of any and/or
substantially all properties of the
corporation requires, in addition to a proper Santos vs. National Labor Relations
board resolution, the affirmative votes of Commission
the stockholders holding at least two-thirds [GR 101699, 13 March 1996]
(2/3) of the voting power in the corporation
in a meeting duly called for that purpose. Facts: Melvin D. Millena, on 1 October
This was not complied with in the case at 1985, was hired to be the project accountant
bar. for Mana Mining and Development
Corporation's (MMDC) mining operations in
At the time of the passage of the questioned Gatbo, Bacon, Sorsogon. On 12 August
resolution, respondent PAMBUSCO was 1986, Millena sent to Mr. Gil Abaño, the
insolvent and its only remaining asset was MMDC corporate treasurer, a memorandum
its right of redemption over the subject calling the latter's attention to the failure of
properties. Since the disposition of said the company to comply with the withholding
redemption right of respondent PAMBUSCO tax requirements of, and to make the
corresponding monthly remittances to, the vice-president). In his complaint-affidavit
Bureau of Internal Revenue (BIR) on account (position paper), submitted on 27 October
of delayed payments of accrued salaries to 1986, Millena alleged, among other things,
the company's laborers and employees. In a that his dismissal was merely an offshoot of
letter, dated 8 September 1986, Abaño his letter of 12 August 1986 to Abaño about
advised Millena that it was the board's the company's inability to pay its workers
decision that it stop porduction (operation) and to remit withholding taxes to the BIR.
in Sorsogon due to the upcoming rainy On 27 July 1988, Labor Arbiter Fructouso T.
seasons and the deterioration of the peace Aurellano, finding no valid cause for
and order in the said area; that the terminating complaint's employment,
corporation will undertake only necessary ruledthat a partial closure of an
maintenance and repair work and will keep establishment due to losses was a
overhead down to the minimum manageable retrenchment measure that rendered the
level; and that the corporation will not need employer liable for unpaid salaries and other
a project accountant until the corporaton monetary claims.
resumes full-scale operations. Millena
expressed "shock" over the termination of his The Labor Arbiter ordered Santos, et. al. to
employment. pay Millena the amount of P37,132.25
corresponding to the latter's unpaid salaries
He complained that he would not have and advances: P5,400.00 for petitioner's
resigned from the Sycip, Gores & Velayo 13th month pay; P3,340.95 as service
accounting firm, where he was already a incentive leave pay; and P5, 400.00 as
senior staff auditor, had it not been for the separation pay. Santos, et. al. were further
assurance of a "continuous job" by MMDC's ordered to pay Millena 10% of the monetary
Eng. Rodillano E. Velasquez. Millena awards as attorney's fees. Alleging abuse of
requested that he be reimbursed the discretion by the Labor Arbiter, the company
"advances" he had made for the company and its co-respondents filed a "motion for
and be paid his "accrued salaries/claims." reconsideration and /or appeal." 8 The
The claim was not heeded. On October 1986, motion/appeal was forthwith indorsed to the
Millena filed with the NLRC Regional Executive Director of the NLRC in Manila. In
Arbitration, Branch No. V, in Legazpi City, a a resolution, dated 04 September 1989, the
complaint for illegal dismissal, unpaid NLRC affirmed the decision of the Labor
salaries, 13th month pay, overtime pay, Arbiter. A writ of execution correspondingly
separation pay and incentive leave pay issued; however, it was returned unsatisfied
against MMDC and its two top officials, for the failure of the sheriff to locate the
namely, Benjamin A Santos (the President) offices of the corporation in the addressed
and Rodillano A. Velasquez (the executive indicated. Another writ of execution and an
order of garnishment was thereupon served said to lawfully attach to a corporate
on Santos at his residence. Contending that director, trustee or officer; to wit: When (1)
he had been denied due process, Santos filed He assents (a) to a patently unlawful act of
a motion for reconsideration of the NLRC's the corporation, or (b) for bad faith or gross
resolution along with a prayer for the negligence in directing its affairs, or (b) for
quashal of the writ of execution and order of conflict of interest, resulting in damages to
garnishment. He averred that he had never the corporation, its stockholders or other
received any notice, summons or even a copy persons; (2) He consents to the issuance of
of the complaint; hence, he said, the Labor watered stocks or who, having knowledge
Arbiter at no time had acquired jurisdiction thereof, does not forthwith file with the
over him. On 16 August 1991, the NLRC corporate secretary his written objection
dismissed the motion for reconsideration. thereto; (3) He agrees to hold himself
Santos filed the petition for certiorari. personally and solidarily liable with the
corporation; or (4) He is made, by a specific
Issue: Whether Santos should be made provision of law, to personally answer for his
solidarily liable with MMDC. corporate action. The case of Santos is way
of these exceptional instances. It is not even
Held: A corporation is a judicial entity with shown that Santos has had a direct hand in
legal personality separated and distinct from the dismissal of Millena enough to attribute
those acting for and in its behalf and, in to Santos a patently unlawful act while
general, from the people comprising it. The acting for the corporation. Neither can
rule is that obligations incurred by the Article 289 of the Labor Code be applied
corporation, acting through its directors, since this specifically refers only to the
officers and employees, are its sole liabilities. imposition of penalties under the Code. It is
Nevertheless, being a mere fiction of law, undisputed that the termination of Millena's
peculiar situations or valid grounds can employment has, instead, been due,
exist to warrant, albeit done sparingly, the collectively, to the need for a further
disregard of its independent being and the mitigation of losses, the onset of the rainy
lifting of the corporate veil. As a rule, this season, the insurgency problem, in Sorsogon
situation might arise a corporation is used to and the lack of funds to further support the
evade a just and due obligation or to justify mining operation in Gatbo. It is basic that a
a wrong, to shield or perpetrate fraud, to corporation is invested by law with a
carry out similar other unjustifiable aims or personally separate and distinct from those
intentions, or as a subterfuge to commit of the persons composing it as well as from
injustice and so circumvent the law. Without that of any, other legal entity to which it may
necessarily piercing the veil of corporate be related. Mere ownership by a single
fiction, personal civil liability can also be stockholder or by another corporation of all
nearly all of the capital stock of a corporation 3. P940.45 documentary stamps need be
is not of itself sufficient ground for attached to the document;
disregarding the separate corporate
personally. Similar to the case of Sunio vs. 4. The judgment of the Court approving
National Labor Relations Commission, the dissolution and directing the
Santos should not have been made disposition of the assets of the
personally answerable for the payment of corporation need be presented
Millena's back salaries.
 Commissioner of Land Registration
overruled ground No. 7 and sustained
Corporate Law Case Digest: Stockholders requirements Nos. 3, 5 and 6.
Of F. Guanzon And Sons, Inc V. Register
Of Deeds Of Manila (1962)  Stockholders appealed
G.R. No. L-18216 October 30, 1962
Lessons Applicable: Strong Juridical  contend that the certificate of
Personality (Corporate Law) liquidation is not a conveyance or
transfer but merely a distribution of the
assets of the corporation which has
FACTS: ceased to exist for having been
 Sept 19, 1960: 5 stockholders of the F. dissolved
Guanzon and Sons, Inc. executed a
certificate of liquidation of the assets of ISSUE: W/N certificate merely involves a
the corporation, dissolution and distribution of the corporation's assets (or
distribution among themselves in should be considered a transfer or
proportion to their shareholdings, as conveyance)
liquidating dividends, corporate assets,
including real properties
HELD: NO. affirm the resolution appealed
 Register of Deeds of Manila denied the from
registration of the certificate of  Corporation - juridical person distinct
liquidation: from the members composing it.

1. The number of parcels not certified to  Properties registered in the name of the
in the acknowledgment; corporation are owned by it as an entity
separate and distinct from its
2. P430.50 Reg. fees need be paid; members.
 While shares of stock constitute
personal property they do not represent
property of the corporation.

 A share of stock only typifies an aliquot

part of the corporation's property, or the
right to share in its proceeds to that
extent when distributed according to
law and equity but its holder is NOT the
owner of any part of the capital of the
corporation nor entitled to possession

 The stockholder is not a co-owner or

tenant in common of the corporate